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February 6, 2020 12:45 PM, EST

Old Dominion Q4 Profits Dip, but 2019 Earnings Grew

Old DominionOld Dominion Freight Line

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Old Dominion Freight Line Inc. reported a dip in fourth-quarter profits and revenue as it contended with what the motor carrier called a challenging operating environment.

But both net income and revenue continued to grow for all of 2019.

The Thomasville, N.C.-based less-than-truckload carrier said Thursday it earned $144 million in the quarter, a 9.7% decline compared with the $159.4 million posted in the same period a year earlier. The company posted earnings of $1.80 per diluted share in the fourth quarter compared with $1.95 a year earlier.

Revenue fell 1.7% to $1.01 billion from $1.03 billion.

For the year, Old Dominion earned $615.5 million, a 1.6% increase from $605.7 billion in the same period a year earlier. The company posted earnings of $7.66 per diluted share in the fourth quarter compared with $7.38 a year earlier.

Revenue also climbed 1.6% to $4.11 billion from $4.04 billion in 2018.

“We didn’t get a lot of help from the economy in 2019,” CEO Greg Gantt said in a conference call with industry analysts.

A “sluggish” industrial economy during the fourth quarter contributed to the year-over-year decrease in revenue for the second straight quarter, Gantt said.

He said the quarterly and annual financial results reflected the carrier’s “focus on revenue quality and cost control during a challenging operating environment.”

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“Our tonnage also declined compared to the fourth quarter last year, although we were pleased to see our yield continue to improve and our volumes begin to stabilize,” he said.

Old Dominion said it will spend $315 million on capital expenditures this year. That includes $245 million for real estate and service center expansion projects; $20 million for tractors and trailers; and $50 million for information technology and other assets.

The company plans to open six to eight service centers in 2020.

“Adding door capacity to our network will ensure that it will not be a limiting factor in our growth,” Gantt said.

Gantt said the economy looks better for 2020, depending on risks from the political environment and the presidential election. But he said the outlook for trucking is better than the latter half of 2019. Tonnage volumes tend to underperform in election years, he said.

The economy “does seem to be stabilizing. The commentary from our customers is for the most part positive. Let’s hope that the economy does improve for the rest of the year,” he said.

“The things we have done from an expansion standpoint, a capacity standpoint put us in a good spot,” Gantt said.

One area where the motor carrier plans to cut back this year is truck purchases. Gantt called it an “equipment holiday.”

The company overpurchased tractors last year expecting tonnage growth that didn’t occur. Now it needs “to grow” into its fleet, Gantt said

Greg Gantt

Gantt

“We will get to end of the year and evaluate what we need going into 2021,” he said.

The company issues a cost inflation projection for this year of 4% on a cost-per-shipment basis.

Also on Thursday, the motor carrier declared a first-quarter dividend of 23 cents per share, a 35.3% increase to the quarterly cash dividend paid in the first quarter of 2019. The dividend is payable on March 18 to shareholders of record at the close of business on March 4.

The company continues to evaluate whether it can increase its dividend payments.

Old Dominion Freight Line ranks No. 9 on the 2019 Transport Topics Top 100 list of the largest for-hire carriers in North America.

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